Call Today 908 617 1776

24/7

Social

I would like to thank Anna-Lena for her hard work and dedication to IATM. I am lucky to count her a friend and have profited from her guidance as a colleague on the Board of Directors. We on the Board are now mindful that over the past 47 years our organization has grown in importance and relevance. Now, more then ever, the tour management industry needs a professional association that can respond to the changing environment in which we work.

Our membership is comprised of many types of guides that perform a range of tasks needed to satisfy a smarter more well traveled clientele. It is my sincere hope that IATM can utilize our most precious resource, our knowledge, to further IATM as the leading worldwide Tour Management industry association. Since knowledge is the key to the success of us and our association, I will challenge myself to provide you with useful information on the most current trends in the package tourism industry.

In return, I ask that you help IATM by taking part in any future surveys. These surveys will provide useful knowledge of trends in our industry that we and others will find valuable. We are the facilitators of the moments that create life long memories. We are the faces of the package tourism industry. We are IATM.

The recession in travel

The financial crisis which began in New York and London has spread to manufacturing in rich, then industrializing countries and has now hit the poorest countries. The World Bank has forecasted that the global economy is likely to shrink in 2009 for the first time since WW II making this the deepest recession since the 1930’s. Global trade is shrinking at its fastest pace in 80 years.

The tourism industry is going to come under great strain in the coming months and years as credit tightens, home values fall, retirement accounts shrink and discretionary spending drops significantly. The one bright spot that oil is once again around $50 and the economies of international travel deals are quickly emerging. Since many 2009 bookings were committed to during the good days of 2008 we have just begun to feel the effects of this historic economic downturn. Until we see a trend to decrease unemployment, it is difficult to accurately see beyond this crisis.

Housing bubble causes decrease in home values

Almost a fifth of American households with mortgages owe more then their house is worth and home prices are set to fall further. Most developed countries have also seen home prices rise over the past decade only to see them plummet in the past few years. The general perception that one has a lower net worth because of the value of their home correlates to spending less on travel. Add to that the fear of missing a mortgage payment because of rising unemployment and you have sufficient reason for people to remain close to home for vacations.

A drop in the GDP means a drop in goods and services

All over the world factory output is falling at its fastest pace in decades. This decrease in demand extends from the consumer through the production and supply chains all the way to the dropping value of our earths raw materials.

The deflationary effects of this slowdown can be seen in the plunging prices of raw materials. Though for how long? The world’s largest economies are printing money at a record rate in order to stimulate their economies. How long can this go on before the obvious inflationary effects of so much extra capital begin to affect the lives of the citizenry?

We are not yet sure how severe the depression in manufacturing affects the service economy, though we should be prepared for the probability of inflation in the coming years. Each region, country and currency would be affected by this reduction in buying power, but to whose benefit?

We have all witnessed the sometimes nauseating fluctuation in the currency markets. This can be seen as opportunity as many travelers follow the dips in order to make the most of their travelling dollar. Though the Euro is feeling the effects of supporting its eastern partners, it has fared the best of the major western currencies so far. Expect to see some advantages as Europeans travel to enjoy the cheap dollar and very cheap British Pound.

Any near term growth of the package tourism market is going to be seen through the value proposition. Our clients are carefully watching their limited moneys and they are demanding more for the exchange of it. Many tour operators and travel suppliers are willing to drop prices to very low levels just to retain exposure to certain markets. During tough economic times, travelers are also willing to trade down in quality level in order to still experience the same location. Our main concern is that Professional Tour Managers will be sidelined in favor of cheaper less qualified tour escorts. The package travel industry should not discount the effects of a quality Tour Manager. Like cutting off your nose so your sweater fill fit over your head, the Tour Manager is the face of the Tour Operator and should not be cut short.

Credit crunch

As the recession tears through the world economies, banks are bound to face further losses. Either by choice or by a decrease in their credit limit, many people are now lowering their revolving debt. The much touted stimulus checks given to the American people in an effort for them to help stimulate the economy buy increasing their spending, actuated itself in decreasing the debt of past purchases and vacations. In addition, some personal spending habits may be curtailed as some people who may have been willing to charge their vacation, may find that the credit is no longer there.

The world’s debtor nations can no longer function by paying for current happiness tomorrow. We have collectively overdrawn our credit to a level that is not sustainable in a violent economic collapse. The banks have realized this and are cutting back on lending as they already have a steady production of loans turning sour. This multifaceted malaise will negatively impact new hotel construction, restaurant revitalizations and motorcoach purchases. Even Dubai, which was created with oil money and seeks to be sustained through tourism, understands that their increase in room capacity comes at a time of declining tourism. The last financial stronghold of the Middle East is plagued by construction halts, massive unemployment and even rumors that the Palm Jumeira, an artificial island that is one of this city’s trademark developments, is said to be sinking. Metaphor or not, as many of the modern travel suppliers try to recoup their investment, be on the lookout for hidden charges. Once free internet service may now require a fee or the fuel surcharges in place when oil was $150 a barrel may remain even though oil is at $50.

A growing breed of traveler

There is a growing segment in the travel community – flashpackers. These are the older and upscale version of the backpackers. They prefer cheap private rooms instead of dorms or name brand 4+ star accommodation.

The internet is their friend as they can aptly search for their own deals on transportation, lodging and dining.

Instead of traveling in a conventional tour group, these assemblies of independent travelers and small groups are now binding together through online social sites and creating their own tours. This means that they act as their own tour operator and guides. Like a class taught by the students, they assume that everyone has some expertise and knowledge and that will be enough to make the trip a success. This confidence comes from years of early independent travel made easy through the internet and confirmed by those who have gone before. This new breed of traveler has started traveling early in life and knows how to experience an area with the aid of travel books and online resources. They have the confidence to strike out on their own or in a small independent group. This recession will only fuel the growth of flashpackers and independent travel groups. Since the tour operators are losing this demographic, we can only hope that this loss is offset by the large baby boomer population.

Retirement accounts halved

The vital pensioner market spends the most money per capita on leisure tourism. This market is now in jeopardy. Many or these retirees have seen their savings cut by as much as half during the past nine months. Others that are on the brink of retirement will have to continue to work for a couple of more years thereby postponing their silver years of traveling the world. It is unlikely that these retirement losses will be recouped anytime soon. Many seniors will have to find cheaper ways of traveling. Though the idea of package tourism is very strong due to its convenience, I hope that corners will not be cut on behalf of the tour operators by using cheaper less qualified guides or worse yet, by switching from Professional Tour Managers to unqualified escorts. This drop in quality will surely cost the Tour Operators more in the long run as the effects of unprofessional escorts negatively affects the quality of a company’s brand for years to come.

Economies all over the world are distressed. The once bright light of tourism is already dimming as personal budgets are cut back. But the world is not ending. This is just part of the continuing economic cycles of boom and bust. Eventually more of the world’s population will have access to international travel. Capacities will increase and new technologies will change the way we do business. Our eternal grace is in realizing that there will always be a demand for a gregarious knowledgeable professional Tour Manager to safely guide the worlds’ tourists.

Scott MacScott CTM

Chairman IATM

Contact Us

THETRAVELS LOGO 150x130

Be Free To Contact Us

Scott@TheTravels.com
+ 908 617 1776